Edrich v. Festinger
| Decision Date | 17 August 2017 |
| Docket Number | 12-CV-4069 (MKB) |
| Parties | GEORGE EDRICH, Plaintiff, v. SAMUEL FESTINGER, Defendant. |
| Court | U.S. District Court — Eastern District of New York |
Plaintiff George Edrich commenced this action against Defendant Samuel Festinger on August 15, 2012, seeking a ten-year renewal of a November 15, 1994 state court money judgment in the sum of $302,042 (the "Judgment") pursuant to New York Civil Procedure Law and Rules ("CPLR") section 5014. (Compl. ¶ 10, Docket Entry No. 1.) Plaintiff moves for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, (Pl. Mot. for Summ. J. ("Pl. Mot."), Docket Entry No. 16; Pl. Mem. in Supp. of Pl. Mot. ("Pl. Mem."), Docket Entry No. 16-12), and Defendant cross-moves for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure, (Def. Mot. for J. on the Pleadings ("Def. Mot."), Docket Entry No. 17; Def. Mem. in Supp. of Def. Mot. ("Def. Mem."), Docket Entry No. 17-2). For the reasons discussed below, the Court grants Plaintiff's motion for summary judgment and denies Defendant's motion for judgment on the pleadings.
On November 15, 1994, Sequa Corporation ("Sequa"), a non-party to this action, obtained the Judgment in New York State Supreme Court, New York County, in the amount of $302,042 jointly and severally against Defendant, Judy Winograd and six corporate entities: Delek Petro Fuel Oil Co., Inc., K Enterprises Corp., B.Q.E. Fuel Transport, Inc., Petrolite, Inc., Citifuel, Inc., and Regional Petroleum and Trucking Corp. (Compl. ¶ 5; Judgment, annexed to Compl. as Ex. 1.) The Judgment was filed and docketed in the Office of the County Clerk, New York County on November 15, 1994. (Compl. ¶ 5; Judgment.)
i. Property dispute
Plaintiff and Defendant have been involved in a dispute for many years over a property located at 607 Avenue K in Brooklyn, New York (the "Property"). (New York Supreme Court, Kings County Decision dated Sept. 20, 2013 at 4 ("Kings County Decision"), Docket Entry No. 7.) Defendant purchased the Property, but title to the Property was held in the name of Defendant's sister, who was Plaintiff's wife. (Id. at 3.) Upon the death of Defendant's sister, title passed to Plaintiff. (Id.)
Plaintiff failed to pay the mortgage and as a result, in 2002 the mortgage-holder, Independence Community Bank, began foreclosure proceedings against the Property. (Id. at 4.) While the foreclosure proceedings were pending, Independence Community Bank assigned the mortgage to MMAL Corp. ("MMAL"). (Id.) MMAL discontinued the foreclosure proceeding and commenced a new foreclosure proceeding against the Property on March 8, 2006. (Id.) OnJune 14, 2007, the court granted partial summary judgment to MMAL.1 (Id.)
ii. Kings County Action and procedural history
On March 9, 2010, Sequa assigned the Judgment to Plaintiff, which assignment was filed in the Office of the County Clerk., New York County. (Compl. ¶ 7; Assignment of Judgment, Docket Entry No. 16-5; Agreement to Assign Judgment, Docket Entry No. 16-6.) On June 11, 2010, Plaintiff initiated an action against Defendant and MMAL, seeking turnover of the mortgage and the note associated with the Property in satisfaction of the Judgment in New York Supreme Court, Kings County (the "Kings County Action"). (Kings County Decision at 3-4.) Plaintiff argued that Defendant was MMAL's alter ego and that Defendant therefore held title to the Property after the foreclosure and the state court could pierce the corporate veil to allow Plaintiff to satisfy the Judgment against Defendant by turning over the Property held by MMAL. (Id. at 5.) Defendant argued, among other things, that Plaintiff could not enforce the Judgment against him because Plaintiff purchased the Judgment from Sequa with the sole purpose of bringing the lawsuit against Defendant, which violates New York Judiciary Law section 489's prohibition against champerty. (Id. at 10-11.)
While the Kings County Action was pending, Plaintiff filed the instant action on August 15, 2012, seeking to renew the Judgment. (See generally Compl.) On October 24, 2012, Defendant filed a letter requesting a pre-motion conference in anticipation of moving to (1) stay the action pending resolution of the Kings County Action and (2) dismiss the action for failure to state a claim and for failure to join necessary parties. (Def. Letter dated Oct. 5, 2012, DocketEntry No. 5.) At a conference on December 5, 2012, the Court stayed the case pending the state court's decision in the Kings County Action. (Min. Entry dated Dec. 5, 2012.)
On October 28, 2013, Plaintiff filed with the Court the September 20, 2013 decision in the Kings County Action. (See generally Kings County Decision.) In the Kings County Decision, the state court rejected Defendant's argument that enforcement of the judgment violated champerty and held that Plaintiff "clearly acquired the Sequa judgment in order to enforce the rights it conferred against Defendant, a legitimate and non-champertous purpose." (Id. at 10.) However, the state court granted summary judgment to Defendant because Plaintiff failed to establish that Defendant had any possessory interest in the mortgage and note associated with the Property. (Id. at 11-14.)
In view of the Kings County Decision, the Court requested briefing from the parties as to whether the Court should grant the relief sought in the Complaint. (Order dated Oct. 29, 2013.) Plaintiff filed a letter arguing that he was entitled to the relief sought in the Complaint but also indicating that he intended to appeal the Kings County Decision. (Letter dated Dec. 2, 2013, Docket Entry No. 8.) Defendant did not respond to the Court's October 29, 2013 Order or Plaintiff's December 2, 2013 letter.
Several months later, on July 10, 2014, the Court entered an order lifting the stay and granting Plaintiff leave to move for default judgment in view of Defendant's failure to answer the Complaint or respond to the Court's orders. (Order dated July 10, 2013.) By letter dated February 19, 2016, Plaintiff notified the Court that the New York State Supreme Court, Appellate Division, Second Department affirmed the Kings County Decision and requested that the Court direct Defendant to answer the Complaint or set a date for a conference. (Pl. Letter dated Feb. 19, 2016, Docket Entry No. 13.) The Court held a conference on June 9, 2016, during which theCourt directed Defendant to answer the Complaint and ordered the parties to agree on a briefing schedule for Plaintiff's anticipated motion for judgment on the pleadings. (Min. Entry dated June 9, 2016.) Defendant answered the Complaint on July 12, 2016, and the parties moved for summary judgment and judgment on the pleadings several months later. (Answer, Docket Entry No. 14; Pl. Mot.; Def. Mot.)
iii. Oral argument
On June 16, 2017, the Court heard oral argument from the parties in support of their respective motions for summary judgment and judgment on the pleadings. (Min. Entry dated Jun. 16, 2017.) At oral argument, the Court declined to sua sponte dismiss Defendant's champerty defense as barred by collateral estoppel and instead addressed the merits of Defendant's champerty claim. Defendant argued, among other things, that the Court should not grant summary judgment in Plaintiff's favor because further discovery was necessary to determine whether Plaintiff was "engaged directly or indirectly in the business of collection and adjustment of claims," in order to resolve the champerty issue.2
After hearing arguments, the Court ordered Plaintiff to submit an affirmation indicating whether he is "engaged directly or indirectly in the business of collection and adjustment of claims," in order to resolve the champerty issue and also ordered supplemental briefing. (Id.; Def. Letter dated June 30, 2017 ("Def. Letter"), Docket Entry No. 24; Pl. Letter dated July 7, 2017 ("Pl. Letter"), Docket Entry No. 25.) By Affidavit dated June 17, 2017, Plaintiff stated that "[o]ther than the judgment at issue in this case, [he has] never purchased or otherwise taken assignment of a judgment or claim in New York or any other state" and is "not in the business ofbuying and selling claims or judgments and [he is] not in the debt collection business." (Aff. of George Edrich ("Edrich Aff.") ¶¶ 3-4, Docket Entry No. 23.)
i. Summary judgment
Summary judgment is proper only when, construing the evidence in the light most favorable to the non-movant, "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); Davis v. Shah, 821 F.3d 231, 243 (2d Cir. 2016); see also Cortes v. MTA NYC Transit, 802 F.3d 226, 230 (2d Cir. 2015). The role of the court "is not to resolve disputed questions of fact but only to determine whether, as to any material issue, a genuine factual dispute exists." Rogoz v. City of Hartford, 796 F.3d 236, 245 (2d Cir. 2015) (). A genuine issue of fact exists when there is sufficient "evidence on which the jury could reasonably find for the plaintiff." Anderson, 477 U.S. at 252. The "mere existence of a scintilla of evidence" is not sufficient to defeat summary judgment. Id. The court's function is to decide "whether, after resolving all ambiguities and drawing all inferences in favor of the non-moving party, a rational juror could find in favor of that party." Pinto v. Allstate Ins. Co., 221 F.3d 394, 398 (2d Cir. 2000).
ii. Judgment on the pleadings
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